- The German Banking Association is calling for the rapid introduction of a digital euro, so that Europe does not lose touch with the world’s financial leaders to the USA or China.
- IOTA’s new Coloured Coins feature enables the issue of a digital Euro on the IOTA Tangle.
- Ethereum and Ripple also have great potential, which was referenced by the Bank of France.
The race to issue a digital currency supported by the central bank is entering the next round. In the USA, Facebook’s Libra is in the starting blocks to enable over 2 billion people to pay via Facebook and Whatsapp via a specially created Stablecoin. China, on the other hand, is already testing the digital yuan in some major cities at Starbucks and relevant local restaurants. So far, Europe seems to be falling behind. Which projects from the cryptospace industry would be suitable for the launch of a digital euro?
Banking association calls for rapid introduction of the digital euro
The German private banking association BdB is pressing for the rapid introduction of a digital euro, “the time for hesitation and philosophising is over” describes BdB chief executive Andreas Krautscheid. However, the industry is also demanding a programmable euro, as this is the only way for companies to process effective and reliable payments based on blockchain technology within the framework of Industry 4.0.
In a position paper entitled “Europe’s answer to scales: potential and conditions of a programmable euro”, the BdB calls for a concrete roadmap from the German government for the launch of a Europe-wide digital currency. The CDU member of the Bundestag Thomas Heilmann demands:
Germany threatens to lose its competitive advantage if we do not soon create an interoperable digital euro that can also be used to create smart contracts.
However, according to FDP member of parliament Frank Schäffler’s question to the German government, there are no concrete timetables yet. Although the European Central Bank (ECB) has a small research team that investigates the opportunities, risks and potential, there is no concrete timetable. The ECB has already investigated and evaluated various cryptospace projects in the past.
Many projects are suitable for the digital Euro: IOTA, Ethereum Ripple
IOTA announced a few days ago that IOTA Coloured Coins (ICC) was introduced as part of the second phase of Chrysalis. ICCs are earmarked coins that can represent any kind of asset from the real world based on the IOTA Tangle. Simply put, an object is assigned a specific IOTA token by means of a “coloring”, i.e. a marking in the hash.
ICCs can digitise any kind of asset or property: Shares, corporate bonds, title deeds, land, real estate or even financial products such as the digital euro. IOTA had already applied for the issue of an e-krona in 2018 in a development competition organised by the Swedish central bank and reached the final round, but in the end decided in favour of the bank for the tech giant Accenture.
The Bank of France has recently published a report discussing various block chains that could serve as a basis for the introduction of the digital euro. The report mentions Ethereum (ETH) and Ripple (XRP), which could serve as a basis for issuing a CBDC:
Since the attributes of a unit of the wholesale CBDC (file representing the currency unit, keys enabling use) may be integrated in a cryptoasset circulating on another blockchain, which is possible on Ethereum and Ripple, for example, it would then become possible to use the unit on this blockchain.
The wholesale CBDC unit could be exchanged via the secondary blockchain between entities not belonging to the digital currency’s formal circulation network.
It remains to be seen whether the digital euro will come soon and on which technology the ECB will rely.
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